INTERSTATE CONSOLIDATED STREET RAILWAY COMPANY, Plff. in Err., v.
COMMONWEALTH OF MASSACHU¬ SETTS.
(See S. C. Reporter’s ed. 79-88.)
Corporations — conditions of incorpora¬ tion — general reference to existing laws.
A street railway company whose charter subjects it to “all the duties, liabilities, and restrictions set forth in all general laws now or hereafter in force, relating to street railway companies,” is bound by the require¬ ment of a statute previously enacted, that street railway companies shall transport school children at a reduced rate, although such statute may be unconstitutional as to already existing corporations.
[No. 13.]
Argued October 15, 16, 1907. Decided No¬ vember 4, 1907.
IN ERROR to the Superior Court of the State of Massachusetts to review a con¬ viction of a street railway company, on ap¬ peal from the First District Court of Bris¬ tol County, in that state, for refusing to transport school children at a reduced rate, exceptions having been heard by the Su¬ preme Judicial Court and overruled. Af¬ firmed.
See same case below, 187 Mass. 436, 11 L.R.A. (N.S.) 973, 73 N. E. 530.
The facts are stated in the opinion.
Mr. Everett Watson Burdett argued the cause, and, with Mr. Joseph H. Knight, filed a brief for plaintiff in error:
Arbitrary discrimination between persons or corporations is unlawful.
Gulf, C. & S. F. R. Co. v. Ellis, 165 U. S. 150, 41 L. ed. 666, 17 Sup. Ct. Rep. 255; Lake Shore & M. S. R. Co. v. Smith, 173 U. S. 684, 43 L. ed. 858, 19 Sup. Ct. Rep.
665.
52 L. ed.
Supreme Court of the United States.
Oct. Term,
that property shall not be taken without just compensation. The abatement of nui¬ sances, the destruction of buildings to check the course of conflagrations, the burning of gambling paraphernalia, the spilling of in¬ toxicating liquors, the prohibition of the use of buildings for illegal purposes, and like cases, suggest themselves as instances of the exercise of the police power free of the obligation to make just or any com¬ pensation for the property destroyed or put out of use.
Mugler v. Kansas, 123 U. S. 623, 31 L. ed. 205, 8 Sup. Ct. Rep. 273; Bartemeyer v. Iowa, 18 Wall. 129, 21 L. ed. 929; Boston 'Beer Co. v. Massachusetts, 97 U. S. 25, 24 L. ed. 989.
If otherwise valid as a police regulation, the statute is partial and unequal in its ap- '"''ation, and is therefore invalid.
Calf, C. & S. F. R. Co. v. Ellis, 165 U. S. 150, 159, 41 L. ed. 666, 669, 17 Sup. Ct. Rep. 255; Barbier v. Connolly, 113 U. S. 27, 28 L. ed. 923, 5 Sup. Ct. Rep. 357 ; Soon Hing v. Crowley, 113 U. S. 703, 28 L. ed. 1145, 5 Sup. Ct. Rep. 730; Yick Wo v. Hop¬ kins, 118 U. S. 356, 30 L. ed. 220, 6 Sup. Ct. Rep. 1064; Cotting v. Kansas City Stock Yards Co. (Cotting v. Godard) 183 U. S. 79, 46 L. ed. 92, 22 Sup. Ct. Rep. 30.
The right to the equal protection of the laws is a right which preceded the adoption of the Constitution, and does not depend for its existence upon that instrument. When it guaranteed to all citizens the equal pro¬ tection of the laws it was merely declara¬ tory of a fundamental and inalienable right of every citizen of a free republic.
United States v. Cruikshank, 92 U. S. 542, 555, 23 L. ed. 588, 592.
The statute prescribes that the rate to be charged for public school children shall be one half the regular rate. The regular rate of a common carrier must be a reasonable one. Such is the universal rule derived from the common law. This court has re¬ ferred to it as “that rule which is as old as the existence of common carriers, — to wit, that rates must be reasonable.”
Interstate Commerce Commission v. Cin¬ cinnati, N. O. & T. P. R. Co. 167 U. S. 479, 494, 42 L. ed. 243, 251, 17 Sup. Ct. Rep.
896.
The statute, therefore, in effect prescribes that public school children shall be carried at one half the reasonable rate, and hence on its face deprives the transportation com¬ pany of its service, that is to say, its prop¬ erty, without just compensation. It is no answer that the regular rate charged by the particular company may, for the time being, be unreasonably high, — the public may at any time refuse to pay that rate, and by ap¬ propriate proceedings compel the company 112
F to abandon it and charge the legal rate, — that is, the reasonable rate, — which, there¬ fore, must always be presumed to be the existing rate.
Hutchinson, Carr. 3d, ed. § 521, p. 568; Rorer, Railroads, 1372; Tift v. Southern R. Go. 123 Fed. 789.
Mr. Dana Malone argued the cause, and, with Mr. Fred T. Field, filed a brief for de¬ fendant in error :
Since the decision of Munn v. Illinois and the railroad cases, decided at the same time (
94 U. S. 113, 24 L. ed. 77 et seq.), the law has been settled that a state has power to limit the amount of charges by railroad companies for the transportation of persons or property within its own juris¬ diction.
Ruggles v. Illinois, 108 U. S. 526, 27 L. ed. 812; 2 Sup. Ct. Rep. 832^ Railroad Com¬ mission Cases, 116 U. S. 307, 29 L. ed. 636, 6 Sup. Ct. Rep. 334, 388, 1191; Dow v. Beidelman, 125 U. S. 680, 31 L. ed. 841, 2 Inters. Com. Rep. 56, 8 Sup. Ct. Rep. 1028; Georgia R. & Bkg. Co. v. Smith, 128 U. S. 174, 32 L. ed. 377, 9 Sup. Ct. Rep. 47 ; Chicago & G. T. R. Co. v. Well¬ man, 143 U. S. 339, 36 L. ed. 176, 12 Sup. Ct. Rep. 400; St. Louis & S. F. R. Co. v. Gill, 156 U. S. 649, 39 L. ed. 567, 15 Sup. Ct. Rep. 484; Smyth v. Ames, 169 U. S. 466, 42 L. ed. 819, 18 Sup. Ct. Rep. 418; Louis¬ ville & N. R. Co. v. Kentucky, 183 U. S. 503, 46 L. ed. 298, 22 Sup. Ct. Rep. 95;
Minneapolis & St. L. R. Co. v. Minnesota, 186 U. S. 257, 46 L. ed. 1151, 22 Sup. Ct. Rep. 900.
A rate or schedule of rates is presumed to be reasonable, or, rather, not so unreason¬ able as to be repugnant to constitutional provisions, and the burden of proof is upon the railroad company to show the contrary.
Chicago, M. & St. P. R. Co. v. Tompkins, 176 U. S. 167, 173, 44 L. ed. 417, 20 Sup. Ct. Rep. 336;
Lake Shore & M. S. R. Co. v. Smith, 173 U. S. 684, 695, 43 L. ed. 858, 863, 19 Sup. Ct. Rep. 565;
Minneapolis & St. L. R. Co. v. Minnesota, 186 U. S. 257, 264, 46 L. ed. 1151, 22 Sup. Ct. Rep. 900.
The 14th Amendment is not violated by the subjecting of a corporation to the gen¬ eral laws in force at the time of its in¬ corporation. See Capital City Dairy Co. v. Ohio, 183 U. S. 238, 247, 46 L. ed. 171, 176, 22 Sup. Ct. Rep. 120. A state may properly impose such a restriction as that contained in Mass. Rev. Laws, chap. 112, § 72, as a condition upon which it grants a franchise.
Baltimore & O. R. Co. v. Maryland, 21 Wall. 456, 22 L. ed. 678; Ashley v. Ryan, 153 U. S. 436, 38 L. ed. 773, 4 Inters. Com. Rep. 664, 14 Sup. Ct. Rep. 865; Louisville & N. R. Co. v. Kentucky, 161 U. S. 677, 40 L. ed. 849, 16 Sup. Ct. Rep. 714; Purdy v.
207 U. S.
1907.
Interstate Consol. Street R. Co. v. Massachusetts.
Erie R. Co. 162 N. Y. 42, 48 L.R.A. 669, 56 N. E. 508.
The fact that the plaintiff in error was authorized to take over the property of a foreign corporation does not affect the case.
Louisville & N. R. Co. v. Kentucky, 161 U. S. 677, 702, 40 L. ed. 849, 859, 16 Sup. Ct. Rep. 714; Ashley v. Ryan, 153 U. S. 436,
442. 38 L. ed. 773, 777, 4 Inters. Com. Rep.
664, 14 Sup. Ct. Rep. 865.
Even if the plaintiff in error had not ac¬ cepted its charter subject to the provisions of Mass. Rev. Laws, chap. 112, § 72, this statute would not be unconstitutional as applied to it. It differs from rate laws gen¬ erally, in that it fixes the maximum rate with reference to another rate, and not at an arbitrary amount. This in itself is clearly unobjectionable, as in the case of the long and short haul clause (Louisville & N. R. Co. v. Kentucky, 183 U. S. 503, 46 L. ed. 298, 22 Sup. Ct. Rep. 95), provided the rate is not thereby fixed too low, and provided the law does not unreasonably dis¬ criminate.
Under some circumstances a rate is not so unreasonable as to be repugnant to con¬ stitutional provisions, even if so low that the company cannot pay dividends (see Rea¬ gan v. Farmers’ Loan & T. Co. 154 U. S. 362, 412, 38 L. ed. 1014, 1028, 4 Inters. Com. Rep. 560, 14 Sup. Ct. Rep. 1047; Cov¬ ington & L. Turnp. Co. v. Sanford, 164 U. S. 578, 595-597, 41 L. ed. 560, 566, 567, 17 Sup. Ct. Rep. 198;
Minneapolis & St. L. R. Co. v. Minnesota, 186 U. S. 257, 268, 46 L. ed. 1151, 1157, 22 Sup. Ct. Rep. 900) . or even if so low that it cannot pay operating ex¬ penses (see Minneapolis & St. L. R. Co. v.
Minnesota, supra). The reasonableness of a rate involves an element of reasonableness as regards the public, as well as the railroad (Chicago, M. & St. P. R. Co. v. Minnesota, 134 U. S. 418, 458, 33 L. ed. 970, 981, 3 Inters. Com. Rep. 209, 10 Sup. Ct. Rep. 462, 702; Covington & L. Turnp. Co. v. Sand- ford, supra; San Diego Land & Town Co. v. National City, 174 U. S. 739, 749, 43 L. ed. 1154, 1158, 19 Sup. Ct. Rep. 804). No evidence was offered in the present case tending to show that any rate greater than a half-fare rate for pupils of the public schools wTould be reasonable as regards the public.
That the application of a given rate to the entire business of the company would reduce its earnings so that it could not pay operating expenses and reasonable dividends is not decisive of the unreasonableness of the particular rate.
52 L. ed.
St. Louis & S. F. R. Co. v. Gill, 156 U. S. 649, 665, 39 L. ed. 567, 573, 15 Sup. Ct. Rep.
484. '
Even if it were possible to determine the amount of excess of earnings over operating expenses from the evidence offered, it would not be possible to determine whether or not the plaintiff in error could have paid reasonable dividends, since no evidence was offered as to the fair or reasonable value of its property.
Smyth v. Ames, 169 U. S. 466, 546, 42 L. ed. 819, 849, 18 Sup. Ct. Rep. 418; San Diego Land & Town Co. v. National City, 174 U. S. 739, 747, 43 L. ed. 1154, 1157, 19 Sup. Ct. Rep. 804.
Furthermore, the effect of the statute in question is not necessarily to diminish the income of the plaintiff in error.
Chicago & G. T. R. Co. v. Wellman, 143 U. S. 339, 343, 36 L. ed. 176, 179, 12 Sup. Ct. Rep. 400.
Even if, at a regular rate of 5 cents per passenger, and a half rate for pupils of public schools of 2% cents, the company could not pay operating expenses and rea¬ sonable dividends, the statute is not neces¬ sarily objectionable as fixing too low a rate.
Com. v. Interstate Consol. Street R. Co 187 Mass. 437, 11 L.R.A. (N.S.) 973, 73 N. E. 530.
State-made rates are regularly based on classifications of traffic, and are not there¬ by invalidated
(Minneapolis & St. L. R. Co. v. Minnesota, 186 U. S. 257, 46 L. ed. 1151, 22 Sup. Ct. Rep. 900). Undoubtedly these classifications must, as in other matters, be founded on reasonable distinctions in princi¬ ple (Pacific Exp. Co. v. Seibert, 142 U. S. 339, 35 L. ed. 1035, 3 Inters. Com. Rep. 810, 12 Sup. Ct. Rep. 250; Gulf, C. & S. F. R. Co. v. Ellis, 165 U. S. 150, 41 L. ed. 666, 17 Sup. Ct. Rep. 255;
American Sugar Ref. Co. v. Louisiana, 179 U. S. 89, 45 L. ed. 102, 21 Sup. Ct. Rep. 43 ) .
The case is to be distinguished from Lake Shore & M. S. R. Co. v. Smith, 173 U. S. 684, 43 L. ed. 858, 19 Sup. Ct. Rep. 565, which held a law requiring the sale of one- thousand-mile tickets to be unconstitutional. In that case the classification was of per¬ sons who bought tickets for a given number of miles, and persons who did not. The court said that the legislation was arbitrary, and not for the safety, health, or proper convenience of the public. See
Wisconsin, M. & P. R. Co. v. Jacobson, 179 U. S. 287, 301, 45 L. ed. 194, 21 Sup. Ct. Rep. 115. In the present case the classification is not arbitrary, but is based on a reasonable dis¬ tinction in principle. Moreover, the effect of the statute is to promote the proper con¬ venience of the public.
113
83-85
Supreme Court of the United States.
Oct. Term,
If the same rule is applied to all railroads | of the same class, there is no violation of the constitutional provision securing to all the equal protection of the laws.
Dow v. Beidelman, 125 U. S. 680, 691, 31 L. ed. 841, 844, 2 Inters. Com. Rep. 56, 8 Sup. Ct. Rep. 1028; Budd v. New York, 143 U. S. 517, 36 L. ed. 247, 4 Inters. Com. Rep. 45, 12 Sup. Ct. Rep. 468; Covington & L. Turnp. Road Co. v. Sandford, 164 U. S. 578, 41 L. ed. 560, 17 Sup. Ct. Rep. 198; Chicago, B. & Q. R. Co. v. Iowa (Chicago, B. & Q. R. Co. v. Cutts) 94 U. S. 155, 163, 24 L. ed. 94, 95; New York, N. H. & H. R. Co. v. New York, 165 U. S. 628, 633, 41 L. ed. 853, 854, 17 Sup. Ct. Rep. 418; Savannah, T. & I. of H. R. Co. v. Savannah, 198 U. S. 392, 397, 49 L. ed. 1097, 1099, 25 Sup. Ct. Rep. 690; New York ex rel.
Metropolitan Street R. Co. v. New York State Tax Comrs. 199 U. S. 1, 47, 50 L. ed. 65, 79, 25 Sup. Ct. Rep. 705; Ames v. Union P. R. Co. 64 Fed. 165.
The statute before the court, unlike that considered in the case of Cotting v. Kansas City Stock Yards Co. (Cotting v. Godard) 183 U. S. 79, 46 L. ed. 92, 22 Sup. Ct. Rep. 30, does not base its classification solely on volume of business.
Mr. Justice Holmes delivered the opin¬ ion of the court:
This was a complaint against the plaintiff in error for refusing to sell tickets for the transportation of pupils to and from the public schools at one half the regular fare, charged by it, as required by Mass. Rev. Laws, chap. 112, § 72. At the trial the railway company admitted the fact, but set up that the statute was unconstitutional, in that it denied to the company the equal protection of the laws and deprived it of its property without just compensation and without due process of law. In support of this defense it made an offer of proof which may be abridged into the propositions that the regular fare was 5 cents ; that during the last fiscal year the actual and reasonable cost of transportation per passenger was cents, or, including taxes, 4 cents; that pupils of the public schools formed a considerable part of the passengers carried by it, and that the one street railway ex¬ pressly exempted by the law transported nearly one half the passengers transported on street railways and received nearly one half the revenue received for such transportation in the commonwealth. The offer was stated to be made for the purpose of showing that the plaintiff in error could not comply with the statute without carrying passengers for less [St Jthan a reasonable compensation *and for less than cost. The offer of proof was rejected, and a ruling that the statute was repugnant to the 14th Amendment was refused. The 114
I plaintiff in error excepted and, after a ver¬ dict of guilty and sentence, took the case to the supreme judicial court. 187 Mass. 436,
73 N. E. 530. That court overruled the ex¬ ceptions, whereupon the plaintiff in error brought the case here.
This court is of opinion that the decision below was right. A majority of the court considers that the case is disposed of by the fact that the statute in question was in force when the plaintiff in error took its charter, and confines itself to that ground.
The section of the Revised Laws (chap. 112,
§ 72) was a continuation of Stat. 1900, chap. 197. Rev. Laws, chap. 226, § 2. Com. v. Anselvich, 186 Mass. 376, 379, 380, 104 Am. St. Rep. 590, 71 N. E. 790. The act of incorporation went into effect March 15.
1901. Stat. 1901, chap. 159. By the latter
act the plaintiff in error was “subject to all the duties, liabilities, and restrictions set forth in all general laws now or hereafter in force relating to street railway compa¬ nies, except,” etc. § 1. See also § 2. There is no doubt that, by the law as understood in Massachusetts, at least, the provisions of Rev. Laws, chap. 112, § 72, Stat. 1900, chap.
197, if they had been inserted in the char¬ ter in terms, would have bound the corpora¬ tion, whether such requirements could be made constitutionally of an already exist¬ ing corporation or not. The railroad com¬ pany would have come into being and have consented to come into being subject to the liability, and could not be heard to com¬ plain. Rockport Water Co. v. Rockport,
161 Mass. 279, 37 N. E. 168; Ashley v. Ryan, 153 U. S. 436, 443, 38 L. ed. 773, 777,
4 Inters. Com. Rep. 664, 14 Sup. Ct. Rep.
865; Wight v. Davidson, 181 U. S. 371, 377,
45 L. ed. 900, 903, 21 Sup. Ct. Rep. 616; Newburyport Water Co. v. Newburvport,
193 U. S. 561, 579, 48 L. ed. 795, 800, 24 Sup. Ct. Rep. 553.
If the charter, instead of writing out the requirements of Rev. Laws, 112, § 72, re¬ ferred specifically to another document ex¬ pressing them, and purported to incorporate it, of course the charter would have the same effect as if it itself contained the words. If the document was identified, it would not matter what its own nature or effect mi»ht V, as the force given to it *by reference and